Responding to criticism from pressured suppliers, Tesco claimed it was simply entering into discussions with its suppliers and was not in a position to demand anything from them that they did not agree to.
“We have not been doing anything outside the values of the company or the Code of Conduct,” said a spokesman. “What we have been doing in the past couple of weeks is not a huge orchestrated campaign. It is just talks and we can’t impose things on suppliers.”
However, it seems suppliers have felt put under pressure by Tesco to help it live up to its new billing as ‘Britain’s Biggest Discounter’. Some have been asked for major financial contributions for promotions, others have been asked for lower prices for goods while some have been told credit terms are being extended from 30 to 60 days.
One medium-sized brand supplier told The Grocer he had been asked for a contribution equalling 15% of his company’s annual sales, while an industry insider claimed Nestlé had been asked for millions back in contributions.
Few suppliers appeared to accept Tesco’s line that its latest move was necessary to cater for cash-strapped consumers in the current economic crisis.
“Obviously if prices are lowered consumers will be happy, but in my opinion this is more about Tesco securing market dominance,” said one major alcohol supplier who was called in this week to discuss terms. Tesco refused to discuss individual cases but claimed extended credit terms was not a major issue for suppliers as long as they were paid on time.
Meanwhile, this week Asda promised to pay small suppliers more quickly.